What you should know about new extended warranty plans

Over the past several years, a new breed of home appliance extended-warranty options has come on to the scene, providing a sudden alternative to the limited-time versions typically pedaled at the check-out counter.

These new warranties are sold by outside companies, the three major players being All Six, Square Trade and Green Umbrella. Some plans operate off a monthly fee (around $10 to $20 per month); others charge a percentage of the total appliance cost (around 2 percent to 10 percent), which you pay in one lump sum for a coverage period of three to five years.

They tend to vary from the retail ilk in four general ways: longer coverage periods (from three years to indefinitely), streamlined handling (one go-to source for all appliances), cheaper rates (up to 40 percent less) and better customer service (quick response time, follow-up calls, etc.). Whether they're as good as they seem depends on a customer's individual situation.

Here are five ways to assess whether a third-party extended warranty plan is the way to go with your new refrigerator, dishwasher, microwave or stove.

1. Life expectancy. Retail warranties always have been a gamble in the sense that they last only a couple of years, destined to run out just when you'll most likely need repairs. Independent extended warranties last longer — forever in the case of All Six — but in that sense present a different kind of gamble. How many years before you're likely to buy a new appliance anyway?

2. Full charge. Be aware of every potential charge a plan could bring, such as shipping and handling or service-visit fees. All Six charges $50 for each service visit, for example, which it states clearly on its Web site. But not being vigilant of such details can burn you in the long run, says Eric Arnum, editor of Warranty Week, a newsletter for the warranty industry. "These fees could easily make a low price too good to be true."

3. Mind the manufacturer. If you decide an independent extended warranty is right for you, it's still a good idea to hold on to that automatic manufacturer's warranty. All Six's plan is, in fact, meant to take over after the manufacturer's warranty runs out. Square Trade's plan defaults to the manufacturer's warranty unless the manufacturer won't cover a repair, but one of its strongest benefits is that it helps customers navigate its manufacturer's warranty. "We encourage customers to fax in their receipt and warranty card when they first sign up," says Steve Abernethy, CEO of Square Trade. "We enter it online and they never have to worry about losing it or digging it out."

4. Price of peace; cost of convenience. There's no doubt that the big value of these new-generation extended warranty plans lies in the long-term peace of mind and convenience they offer. If these two values mean a lot to you, chances are you will like this type of warranty. "Most people don't even know how long their manufacturer's warranty lasts," says Geoff Green, president of All Six, which covers six appliances of any age under one fee. "We'll help you get you that information, put you in touch with the manufacturer, whatever you need."

5. Cancellation clause. As with any long-term investment, make sure you are free to opt out at any time, for any reason, at no cost.

Links to the three major extended-warranty options: • All Six: www.allsixwarranty.com

• Square Trade: www.squaretrade.com

• Green Umbrella: www.greenumbrella.com